North Central Texas Pay-As-You-Drive Insurance Pilot Program

Pay-As-You-Drive (PAYD) Insurance, or mileage-based insurance, has the potential to be an effective transportation pricing strategy with multiple benefits including reductions in vehicle miles traveled, fuel consumption, and vehicle emissions. The North Central Texas Council of Governments (NCTCOG), in partnership with Progressive County Mutual Insurance Company (Progressive), conducted a pilot program to evaluate the feasibility of implementing mileage-based insurance and whether such a program would impact driver behavior. During the first phase of the study, a statistical analysis of available data produced a positive correlation between mileage driven and accident frequency, thus validating the hypothesis that insurance companies can provide financial incentives to customers who drive fewer miles because of an associated reduction in claims costs. A second phase of the pilot program offered financial incentives to volunteer participants who were able to reduce their mileage from a personal baseline condition. Data collected from the participants' vehicle on-board diagnostic system resulted in an average mileage reduction of five percent. Additional spatial analysis concluded that mileage reduction was independent of participant residence suggesting PAYD Insurance would be a viable strategy to minimize negative environmental impacts region-wide.